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Difference Between Secured And Unsecured Loans

By | Secured Loans

Let’s say there is no scarcity when it comes to borrowing a loan. With the influx of loan providers including the bank and private lenders; it is tough to make the decision. But; before you go ahead to borrow a loan, there’s an important thing to know and consider. There are 2 types of loan available – Secured loans and Unsecured Loans.

Let’s understand the difference between secure and unsecured loans here:

Unsecured loans

You might have come across the word “Personal loans”; yes these personal loans are unsecured loans. These are collateral free loans; which means it doesn’t require offering anything against getting the loan. Without collateral the bank will wish that the money is repaid soon. Usually; the rate of interest is higher when we list down the difference between secured and unsecured loans; the loan tenure offered are shorter. Some of the common examples of unsecured loans are credit card loans, personal line of credit etc.

The eligibility majorly depends on your credit score, income and the ongoing loans and liabilities. The loan is usually used for personal purposes such as wedding expenditure, vacations, home renovation, settling credit card payments, emergency medical expenses and so on.

The banks as well as private lenders may refuse to approve the loan under any circumstances which can be

  • Bad credit or no credit
  • Misleading information in loan application
  • Unable to attach right documents
  • Incomplete information

Secured Loans

Secured loan is one of the loan categories which ask for collateral against the loan money. The collateral can be anything from valuable jewelry, assets, property etc. When approved of secured loans the bank/lender will be holding the title of the collateral until you repay the loan in full.

If an individual within the loan tenure is unable to repay the loan amount; the bank/lender holds the right to sell of the collateral and recover the debt. The borrowing limit is higher when compared to unsecured loans. Usually; entrepreneurs are seen taking secured loans for expansion of their business, getting new inventory/machineries, adding new units to the business and so on. Some of the common loans of secured loans are vehicle loans and mortgage loans.

The eligibility criterion is mostly same like that of unsecured loans. However; the rate of interest is low and loan tenure long.

Before You Make Decision

Both unsecured and secured loans come with pros and cons. And it is important to know under which circumstances you are borrowing the loan. Have a clear and thorough understanding of the difference between secured and unsecured loans. Since; it an important financial decision and the installments can go a long way; it may turned out to be costly incase if you haven’t thought of including in your monthly budget.

Try to curb expenses and ensure that you are able to pay a lump sum amount in between to pay off the loan. If you have any queries ask the loan representative. Read the fine print carefully and ask for the processing fees or any other charges it include. Only shortlist the loan you think you can afford.

However; the rate of interest is low and loan tenure long.

If you have any queries ask the loan representative. Read the fine print carefully and ask for the processing fees or any other charges it include. Only shortlist the loan you think you can afford.

How to Get a Secured Loans with Bad Credit

By | Secured Loans

Bad credit can be a huge hindrance to loan approval. There are various reasons for bad credits such as missing repayments, missing bill payments or a failed credit application. Having bad credit makes you a high-risk customer to almost all the major banks and other lending agencies. People with bad credit are eligible for a bad credit loan which has interest rates higher than the normal interest rate. This makes it difficult as the financial status of the borrower is already running low.

A secured loan is the type of loan that requires the customer to use something valuable as collateral. These include jeweler, car, house, etc. Secured loans have less interest rest as compared to other loans. If a person has a bad credit score, it is advised to not keep one’s house as collateral.

A loan term is decided based on the credit score. So are the terms of the loan. Since there is a lot at stake one should only apply for a loan if it is unavoidable. Try borrowing money from friends and family, if the amount is low. Or plan out your finances so that you can repay the money on time and then proceed towards applying for a loan.

While you might think that there’s no way around this situation, there are ways one can get Secured Loans With Bad Credit.

Check for eligibility: If your application is rejected one more time, it might reduce your score further. Therefore, check whether you are eligible for applying for such a loan. Hence, read the eligibility criteria thoroughly and then start the application process.

Interest rate: Try to find the cheapest interest rate available. This will increase your chances of successfully making payments, thereby increasing your credit score. One can use online tools to compare the interest rates provided by various lenders and shortlist a few. This should be followed by rigorous screening to choose the best lender who is ready to offer you a secured loan with bad credit.

Choose wisely: Find out lenders who are willing to provide a secured loan with bad credit. Otherwise, it will be a waste of time and effort, which is not feasible. There are very few money lenders who provide a secured loan with bad credit, hence one should choose to be smart in choosing the lender.

Credit Unions: These are nonprofit organizations who are willing to help you even with a low credit score. Credit unions consist of members and are similar to commercial banks. Look for a credit union that is somehow related professionally to you or your employer. This will increase the chances of approval. The lean terms provided by a credit union are more favorable and the application process is relatively simple.

Terms and Conditions: One should go through the terms and conditions of the loan and know all the possible outcomes if the borrower cannot pay the money back on time. Since there’s a history of unpaid loans involved, the borrower should choose the one with minimal penalty. Secured loans, is not paid on time can cause the money lender to seize the collateral, hence causing more financial loss and a lower credit score.

It might sound impossible to get a Secured Loans With Bad Credit to be approved, but through proper research and appropriate money lending agencies, one can easily borrow money if and when required. One should also try improving their credit score while repaying the money for the current loan. One should take a low-risk loan if he has his finances unplanned and in desperate need of a loan.

Tips to get a Secured Homeowner Loan

Tips to get a Secured Homeowner Loan

By | Secured Loans

Homeowner Loans UK

If you are searching for a secured loan or homeowner loan on the internet, you will find hundreds of articles and blogs. However, first of all, you need to understand the term.

What is a homeowner loan?

A homeowner loan, also called a secured loan is a type of loan where a property such as a home is kept as a security against the amount you want as a loan. Now here is a disclaimer you will find on all secured loans: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

There are quite a few lenders who are willing to provide you with a secured or homeowner loans in UK. Before you can get a secured loan the lender will need to ensure you are eligible to take out a secured loan and meet their criteria. Some of the key requirements they check are; the amount of equity, your credit history, existing credit commitments, your income, affordability and other factors.

Is it a bad idea to take a secured or homeowner loan?

You might have built up the equity in your home, after years of hard work and efforts. You may be thinking, is it a good idea to take up another loan against your home. However, the best solution is to speak with a qualified advisor to see if securing further debt against your home is the best solution or not.

Before making a decision on taking a secured or Homeowner Loans In UK. Here is a list of tips to consider for secured loans.

Maintain a good credit score:

Your credit score is determined by evaluating various factors such as income, previous loans, regular repayments, credit commitments any other factors. Always ensure try and maintain a good credit score, if you are looking to get the best rates on further lending.

Check the interest rate:

When you speak to a broker to discuss your options they will ascertain based on your affordability, income and credit commitments who the best lender will be for you. They will also discuss what the interest rate will be.

The reason your taking a secured loan:

Whether you want to utilise the equity in your home for business development, travel plans, unexpected expenses or debt consolidation our brokers will advise and work out with you if a secured loan is the right option for you.

Please note if you are taking a secured loan to consolidate unsecured lending such as a personal loan or credit cards you must be made aware you will be taking unsecured debt and securing this against your home. You also will be spreading this debt over a longer period of time that will end up costing you more. The benefit of this is having one lower payment that may work out to be more affordable.

Your Credit Report:

Have you checked your credit report yet? What does it reveal? It is one of the first things that will be checked by the broker/lender. Your credit score and report, alongside your income and affordability will determine your secured loan lender and interest rate.

There are many credit reporting agencies in the UK that might help you to get a credit report. All you need to do is to contact them. Get your credit report and evaluate it.


How to apply for a secured loan?

By | Secured Loans

Once you have decided whether a secured loan is the way forward for you, there are three main things you will need to take into consideration when going ahead to apply for one.

Although a secured loan is available to people in most circumstances, the amount you are able to borrow, loan terms and the interest rates available to you are dependent on your credit profile. Lenders are generally more willing to offer secured loans to those with a good credit history.

Another thing to consider when applying for a secured loan is having a steady address, as this will improve the chances of your application being approved. To be eligible for a secured loan, you will usually have to have been a UK resident for a minimum of three years.

Finally, you must ensure you have a realistic repayment plan. This means that you must have the relevant plans in place to ensure your monthly repayments are made on time. Although the interest rates for secured loans tend to be much more favourable, it is essential that payments are made to avoid the risk of losing your assets.